Rural hospitals can’t afford revenue leakage, and while most CFO’s might have an idea about the most common sources, unfortunately a majority do not know the depths of the problem or how much revenue they’re truly missing out on.
To improve their operational systems and stay viable amidst competition from bigger hospitals and increasingly available outpatient service options, rural hospitals must review and revamp their collection policies.
The landscape of healthcare reimbursement is changing drastically from that of just a few years ago. The biggest revenue challenge facing all healthcare providers is the change from insurance-based revenue to consumer-driven reimbursement. As recently as five years ago, most hospitals could count on 90% of their revenue coming from government payers like Medicare and Medicaid and commercial insurance companies with the remaining 10% coming in from patient payments. Today, however, with nearly 25% of employees enrolled in high deductible employer-sponsored healthcare plans, patients make up 33% of provider revenue.
Closing the Loop on Patient Collections
This shift in the payer mix is not going away, and the outcome of increased patient financial responsibility is the increased cost of trying to collect from patients. A survey reported by the Consumer Financial Protection Bureau found that between December 2014 and March 2015, consumers reported medial debt as the most common type of past due bill or expense for which they were contacted about payment. The cost to medical providers to collect from patients is notably higher and the cost increases as the accounts becomes older.
Tighten up your hospital’s patient collection process by being proactive with the following actions:
Offer Finance Options. Patients don’t look at their medical bills any differently than they do other financial obligations, so they appreciate the choices that other creditors offer. Let them set up a monthly payment plan with you or offer alternative financing options.
Don’t Write Off Patient Balances. Hospitals routinely write off patient balances, but besides being counterproductive, it could also violate the terms of insurance contracts. Medicare expects healthcare providers to collect patient co-insurance, and private carriers expect the same with copays and deductibles. Providers run the risk of breaching their contract and of the insurance company reducing allowed amounts to match what the healthcare provider accepted as payment in full when they wrote off the patient balance.
Collect Patient Payment at Time of Service. Utilize eligibility and benefit information available through your patient accounting system. Staff should confirm insurance coverage, and co-payment and co-insurance amounts as well as remaining deductible. Transition patients into this new procedure by posting the policy at patient intake, in patient rooms and include it in new patient literature.
Search for Hidden Insurance Coverage. Patients routinely qualify for new or different coverage without notifying your intake staff. Make a policy to at least verbally ask about insurance changes with every patient at every visit. Another tip is to confirm active Medicaid coverage at every visit, and check for Medicaid coverage for self-pay patients and Medicare patients with no supplemental coverage. Medicaid covers medical services up to three months prior to the patient’s coverage date, so don’t forget to check your system for qualifying charges.
Other Common Revenue Leaks
Increased patient financial liability for healthcare services is not the only leak found in hospital revenue cycle management. Looking closely at your hospital’s patient processes can uncover many other revenue cycle losses.
Conversion to New PAS. Modern healthcare systems cannot function without technology, but conversion to a new patient accounting system can open a host of revenue leaks. A survey of more than 500 hospitals in 2016 compared pre-conversion to post-conversion KPI’s found significant financial risks associated with conversion to a new PAS. If you’re converting to a new system, be sure to assign Billing staff to work the accounts in the old system, either by importing them into the new system, or working the old accounts until resolution. Additionally, work with Patient Registration to ensure they’re inputting all the correct billing information when the patient presents.
Scrutinize Denied Claims and Prioritize Follow-up. Not addressing denied claims when you receive the explanation of benefits allows for massive leakage from the Business Office. Assign specific staff members to follow up on denied claims every day. Allowing these staff members to specialize in denial management ensures you will have experts who can quickly and efficiently identify payment issues. Working the largest dollar amount claims and the oldest bills first gets money in the door fast and provides opportunity to research what types of claims require appeal, and what you can do to correct the issues affecting payment. Also, insurance contracts often have different timely limits for denied claims. Assigning staff to work denied claims daily will keep your claims in a payable status.
Shore Up Missing Charges & Reduce Coding Errors. Consider your Coding staff as a highly skilled resourced and use them only for coding purposes. Clinical staff should capture every service and Registration staff can help fill in missing information on chargemaster forms. Occasional queries to clinical staff will happen, but if a Coder is habitually waiting on clinical staff before uploading a charge, your hospital is looking at considerable leakage of income. According to HFMA, hospitals lose up to 1% of their potential annual revenue because of charge capture issues. For a hospital with $500 million in annual net revenue, that translates to $5 million. Leverage the charge capture capabilities of your patient accounting system and tweak your system’s reporting features to identify missing clinical information. Use reports to educate clinical staff on correct documentation guidelines and what undocumented charges cost each month.
Review Payer Contracts. Insurance networks provide a multitude of openings for incorrect reimbursements that lead to significant lost revenue every year. Negotiating the best terms for your hospital is only the beginning of contracting process. Your PAC should allow you to document reimbursement for each payer and for each CPT code. Run weekly or monthly reports that identify incorrect payments and address them immediately with your insurance representative. Beware of non-contracted payers tapping into contracted PPO networks and notify them that you are not accepting discounts from payers with whom you do not have a contract.
Stop Leaks Before They Happen! Quantifying leaks in your revenue cycle is the first step to determine which sources are affecting your bottom line the most, how much money is at stake or lost, and helps you identify how to stop the leaks. Periodically reviewing processes, procedures, and using system analytics will help you effectively stabilize your revenue cycle.
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